Can Blockchain Improve Carsharing in Africa?

A new Siemens initiative—Siemens Mobility—aims to incorporate blockchain technology into carsharing to make it more convenient than it is today.

Carsharing generally refers to using or renting a car for a short period. The main goal of carsharing is to reduce reliance on private car ownership by introducing shared-use mobility. 

This mobility-on-demand service allows people to rent cars and only pay for their usage or miles traveled. Examples of carsharing services in operation today include Zipcar and Enterprise CarShare.

In Africa, private car ownership is a growing trend. Liberia leads in terms of car ownership followed by Nigeria, South Africa, Egypt and Morocco. Kenya is also gradually becoming a lucrative market for private vehicles. According to figures presented by Be Forward, there’s a vehicle for every 30 Kenyans while in Tanzania, it is one car for every 47 people.

Incentive to drive less

One advantage of carsharing is that it gives people the incentive to drive less which could help save costs for drivers and commuters. Rather than incurring costs associated with car ownership such as insurance, car payments and parking, people can simply opt for a car rental service. Car sharing members have the convenience of renting the car for any time period, even for as short as one hour.

Moreover, studies show that carsharing significantly reduces the number of cars on the road—each car shared can replace between 9 to 13 private cars. This is good for the environment because it contributes to the reduction of greenhouse gas emissions. Additionally, most shared fleets are recent models with the latest emission control and fuel-efficient.

Blockchain in carsharing

However, there’s one major issue with carsharing that Siemens seeks to improve using blockchain. The problem relates to the fueling card, which allows the car renter to refill the vehicle with gas. Under a carsharing subscription, customers are restricted to using the card at specific gas stations. Besides, the cards are sometimes stolen which inconveniences both the driver and the carsharing company.

Siemens sees blockchain very useful in this aspect as the technology can enable a more frictionless way of transacting.  With blockchain, all parties in the carsharing marketplace can transact seamlessly by exchanging information securely in a trustless ecosystem. Payments are executed directly from the user’s digital wallet and transferred to other network partners without the need for a physical card.

Smart contract automation

Other areas of carsharing that blockchain can improve include recording vehicle ownership, tracking the use of vehicles, and issuing of insurance costs. Using blockchain smart contracts, it is possible to automate critical aspects of carsharing such as the verification of driver’s and owner’s identities.

Even booking and purchase of insurance can be done securely through the carsharing application to save time and money for all parties.  Once all that is done, users will receive remote key access via smartphone, which they can then use to unlock the vehicle and drive. Not only does this provide complete transparency into the carsharing marketplace, but it also eliminates intermediaries in the industry.

So the concept of using blockchain to improve carsharing in Africa could greatly transform the mobility space. At Bosch’s 2019 Connected World conference, Siemens presented a blockchain-based smart parking system that also aims to revolutionize mobility.

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About the author

Vincent Olago

Vincent Olago

Vincent Olago is the Managing Editor of Ledger Africa and has been active in the blockchain space for three years now. He's passionate about entrepreneurship and the potential of disruptive blockchain technologies to reshape our world. He supports startups to tackle blockchain challenges, address strategic problems and optimize growth.

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